LC Accountants

There are multiple life cycles and stages that you go through as a business owner and at each point there is something that creates a bottleneck.

Pricing always seems to be a bottleneck because most businesses are underpriced. This isn’t about price gouging or being unethical with the way you operate, this is about ensuring you have a business that doesn’t crash and burn the moment there is an economic dip or market crash.

We are after longevity and sustainability, with that comes financial stability and freedom.

No matter what stage of business you’re in, your pricing should be reviewed annually (AT A MINIMUM). When you grow and start adding costs to your operations like more software, staff, insurances, this all eats into your overall margins.

And this is where owners that scale past the millions really start to feel their margins shrink. What worked at $500,000 a year with good margins starts to break at that $1–1.2 million mark, as the work increases you require more labour to keep clients happy and that is when that hamster wheel feeling starts to really kick in.

I want to help you with figuring out your pricing regardless of the stage you’re in, and if you think I am going to give you a formula and a spreadsheet to figure it out, you’re absolutely correct. Don’t freak out that it’s too much work and you “don’t have time”. This is the reason you’re not making money, because you’re not taking the time to review one of the most important things in your business, seems a bit ridiculous doesn’t it?

So block out 1 hour to do this exercise, so you can finally optimise your pricing and in turn your profit and time. That’s a pretty damn good return on investment.

I did this with a client recently and guess what happened when they increased their pricing.. THEY LOST ALL THEIR CLIENTS.

No they didn’t, they lost 2.

I worked with another client who thought their prices were fine, until we broke it down and realised that the amount that they were left with was below minimum wage. We did a bigger increase for their fees by 125% – increasing the base amount from $75 to $85. They had 1 client complain about the increase, nothing else changed as people saw the value in their service.

This is something you should keep in your resource tool kit at all times and once you’ve done the majority of the work once, it becomes easier to make those slight adjustments as things change and grow.

Stop avoiding this part, your future self, business and bank account will thank you for it.